Studied by 24 peopleExternal Environment
involves surrounding factors that impact a business, has minimal control over
include macro factors and operating factors
Global Considerations - Globalisation
resulted in Australian businesses facing more international competition than ever before
Global Considerations - Overseas Competitors
develop understanding on how these businesses operate, identifying their strengths and weaknesses
planning consider how they can achieve lower costs or implement strategies to distinguish themselves and develop competitive advantage
Global Considerations - Overseas Markets
access larger and more diverse customer base, allowing a business to reduce its dependence on its local market
essential for business owner to be aware of different customer needs and cultural expectations
may need to adapt products to suit customer needs in different locations
Global Considerations - Offshoring of Labour
involves business moving its services or processes to another country
should consider time zone differences, as it can disrupt business processes
reasons why businesses consider offshoring labour
legal & government regulations: consider legal and government regulations in the offshoring country, as tax wages and minimum wages may differ
communication & cultural barriers: language spoken & level of English may differ; must consider cultural norms
business reputation: sending labour overseas may have impact on increasing unemployment rate in local economy and harm reputation
Global Considerations - Exchange Rates
each day, value of country can fluctuate, therefore business must anticipate changes
exchange rates - relative price at currency of country can be exchanged for currency of another country
Currency appreciation: increase in value of currency against foreign currency
beneficial for Australian business that purchases materials from overseas countries as its Australian dollars ca buy more of a foreign currency
make business’s goods and services more expensive for overseas buyers - less attractive
Currency depreciation - decrease in value of currency
increase cost of imports
cheaper for overseas buyers - attractive in overseas markets
Global Considerations - Online sales
involve buying and selling goods and services using the internet (e-commerce)
reach wider range
policies and processes - shipping, refunds, returns
protected by cyber attacks - breach of privacy resulting in loss of customer trust
Global Considerations - Copyrights
exclusive right to control use of creative use
not engaging in copyright infringement - result in fines and penalties
Global Considerations - Trademarks
exclusive right granted over unique aspect of business
original and unique to avoid trademark infringement - no reproduction of unauthorised materials
Global Considerations - Patents
exclusive rights to use innovative devices, substances, methods and processes
protect invention from competitors
Economic Conditions
productive performance and financial stability of nation
Economic Conditions - Interest rates
amount charged, expressed as percentage of principal, by leader to borrower for use of assets
loans - taken out for initial costs
interest rates low - business loans less expensive
interest rates high - pay more for amount borrowed
Economic Conditions - Employment Levels
percentage of labour force working in paid emplotment
availability of workers - influence wages to attract workers
unemployment rates low - employment levels high
unemployment rates high - employment levels low
Economic Conditions - Tax Rates
percentage of income or spending required to be paid to government
tax obligation - budget for additional business expenses
companies required to pay 25%-30% of profit
Economic Conditions - Business & Consumer Confidence
measure of consumers’ feelings and expectations about current and future economic conditions
when high - more confident in spending
when low - less confidence in spending
Legal & Government Regulations
laws and roles made by parliaments and governments, as well as decisions made by courts
Legal & Government Regulations - Employment Laws
obligations employers and employees
include minimum wages, fair working conditions
against unfair dismissal and aims to resolve workplace disputes
Legal & Government Regulations - Environmental Legislation
protect environment - minimise energy use, reducing water use, reusing recycling, and reducing waste
businesses’ impact on environment and protect limited resources
Legal & Government Regulations - Industry Regulations
rules specific to businesses within certain industry
permits or licences relevant to business industry
eg. Working with Children Check
Legal & Government Regulations - Tax Reguirements
obtain Australian business number (ABN) - identifies business
apply for tax file number (TFN) to the Australian Taxation Office (ATO) - allows business to be easily identified for taxation purposes
Legal & Government Regulations - Council Regulations
local government rules operating in specific geographical area
location of business - local zoning laws
operating hours of business - restrictions put in place for certain set of time
types of signs business displays - restrictions on signage
renovation of business premises - limit to type of renovation
waste disposal of business - how business manages waste
Technological Considerations
invention and innovation of tools that solve problems and enhance processes
Technological Considerations - Automated production lines
many manufacturing businesses have implemented automated production lines using technology to reduce need for human labour
Technological Considerations - EFTPOS
method of payment for customers
Technological Considerations - Online Presence
most businesses have established online presence
eg. online shop
website
customer service
Technological Considerations - Strengths
usually work quicker, producing more in shorter period of time
complete more complex and dangerous tasks than human labour
more accurate - less mistakes and less errors/defects
Technological Considerations - Weakness
loss of employee’s jobs - replaced & decrease reputation of business
expensive in short-term
difficult to customise for individual customer needs
Societal Attitudes & Behaviour
societal attitudes - collective values, beliefs, opinions held by group of people
greater awareness about improving physical and mental health and wellbeing
wellbeing of employees
environmental sustainability
hygiene practices
Corporate Social Responsibility Considerations
CSR
ethical conduct of business - above and beyond legal obligations
Corporate Social Responsibility Considerations - Environmental
local suppliers instead of overseas - reduces distance - lowering carbon emissions
waste management strategies - recycling and reusing excess materials - less landfill
eliminate non-environmentally friendly packaging
use renewable sources of energy
Corporate Social Responsibility Considerations - Social Considerations
local suppliers instead of overseas suppliers - provide employment to locals and boosting local economy
assist employees when technology replaces them - reduces unemployment and minimising social issues
encourage volunteer creating a positive impact on improving various social issues
Corporate Social Responsibility Considerations Advantages
positive business reputation
attract highly skilled employees who value ethical conduct
attracts motivated employees
production process more efficient
customers willing to pay more for ethically produced goods and services
Corporate Social Responsibility Considerations Disadvantages
decrease productivity levels because of constant focus
employees feel overwhelmed to adapt new practices
time-consuming
initially expensive
Operating Factors
primary external factors impacting business that has some control over
Customer Needs & Expectations - Convenience
customers expect experience that saves time and effort - important for business to plan how they can offer most convenient experience for cusotmers
Customer Needs & Expectations - High quality good/service
owner should ensure that products are of high standard and operate
Customer Needs & Expectations - Responsive Customer Service
customers expect business to respond to queries promptly
business ensure customers able to interact with business in order to earn customer loyalty
Competitor’s Behaviour
same or similar industry that offer similar good/service
when planning business - owner consider behaviour of competitors to establish competitive advantage
Competitor’s Behaviour - Selling similar good for lower price
business may need to reconsider its manufacturing and operating costs to determine if it can lower production costs in order to offer its product at same or similar price to competitors
Competitor’s Behaviour - Selling highly unique good/serivce
build competitive advangtage and invest in creating good/service with newer or more uniuqe features
Competitor’s Behaviour - Entering industry where few businesses have large market share
investigate strengths and weaknesses of competitors and take advantage of weaknesses
continuously innovate in industry
Special Interest Groups
organisations or group of people seek to influence laws, policies or behaviours to benefit specific cause
Special Interest Groups - Unions
organisations who represent and speak on behalf of employees in particular industry to product and improve wages and working conditions
represent and defend employees when issues arise in workplace (eg. discrimination)
businesses who do not apply with union requests may face significant consequences
union can legally organise employee strike - negative public reputation
Special Interest Groups - Business Associations
advise and support businesses in particular industry
provide information through training programs, seminars, conferences, or personal consultations
Special Interest Groups - Environmental lobby groups
advocate for production of environment and promote environmental issues to businesses, government and public
operate in manner that is harmful to environment, often campaign to public and government to prohibit business from continuing its operations
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